AIG.... Should we worry?
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larry
Sep 18, 2008, 12:41:52 PM9/18/08
to Car Insurance Info Page
http://www.urbaninsuranceagency.com/insurance-articles/170/aig-and-state-guaranty-funds.html
AIG and State guaranty funds
by Larry Lubell
The financial crisis in the US financial markets continues to spin out
of control. In the latest, and largest government bailout ever for the
Federal Reserve, the FED came to the rescue of American International
Group Inc.(AIG) with an $85 billion dollars of taxpayer money/ In
exchange the government will get a 79.9 percent stake in one of the
world’s largest insurers as well as the right to remove senior
management.
AIG shares sank $1.54, or 41 percent, to $2.21 in afternoon trading
Wednesday. They traded as high as $70.13 in the past year. Clearly
wiping-out hundreds of billions of investors money.This can be
particularly devastating for those workers of AIG that had large
amounts of company stock.
“The administration is approaching an unprecedented step, but
unfortunately we are living in unprecedented times. Hearing of these
plans, you have to stop to catch your breath. But upon reflection, the
alternatives are much worse,” said Sen. Charles Schumer, D-N.Y.
In a statement late Tuesday, AIG’s board of directors said the loan
will protect all AIG policy holders, address concerns of rating
agencies and buy the company time to sell off assets.
Hank Greenberg, the key figure credited with building AIG into the
world power-house, then replaced as CEO three years ago as part of an
accounting probe; when interviewed today stated.
“No, I think it’s an unfair appraisal,” said Greenberg, “You know,
there are many things that contributed to this unfortunate episode.
after I left the company, all the risk management procedures that we
had in place were obviously dismantled. I can’t explain that. There’s
a new board of directors. One should be asking that board of directors
what they did and why.”
Greenberg said he has lost “my entire net worth. Literally, my entire
net worth.’
“Worked 40 years building the greatest insurance company in history,
one that everyone in the world envied who was in this industry. I’ll
get by, but my heart goes out for the thousands and thousands of
employees and their families who shareholders and not only in the
United States but worldwide. That is a tragedy,” he said.
While the parent holding company, is based in New York, it is really a
large collection of individual insurance companies licensed state by
state; each monitored by state insurance regulators. AIG, despite
financial issues; states its insurance companies were solvent and have
the capability to pay claims. Anyone covered by AIG insurance
companies can expect their claims to be paid as usual, said Scott
Kipper, the Insurance Division administrator
“There is a procedure for insolvencies, and it involves trying to
settle the liabilities of the company to the maximum extent possible.
To the extent they can’t be met, there are guaranty funds in every
state that cover certain types of insurance,” said Robert Hartwig,
president of the Insurance Information Institute, a nonprofit industry
group.
Most companies are covered by paying into there state guaranty funds
Some companies are non admitted, and do not pay into the fund,
therefore their insureds are not protected. Urban Insurance Agency,
does not place business with NON ADMITTED companies.
AIG scrambled Monday to reassure worried insurance clients. “Insurance
policies written by AIG companies are direct obligations of our
regulated insurance companies around the world. These companies are
well capitalized and meet or exceed local regulatory capital
requirements,” said Peter Tulupman, a company spokesman in an emailed
statement.
AIG and State guaranty funds
by Larry Lubell
The financial crisis in the US financial markets continues to spin out
of control. In the latest, and largest government bailout ever for the
Federal Reserve, the FED came to the rescue of American International
Group Inc.(AIG) with an $85 billion dollars of taxpayer money/ In
exchange the government will get a 79.9 percent stake in one of the
world’s largest insurers as well as the right to remove senior
management.
AIG shares sank $1.54, or 41 percent, to $2.21 in afternoon trading
Wednesday. They traded as high as $70.13 in the past year. Clearly
wiping-out hundreds of billions of investors money.This can be
particularly devastating for those workers of AIG that had large
amounts of company stock.
“The administration is approaching an unprecedented step, but
unfortunately we are living in unprecedented times. Hearing of these
plans, you have to stop to catch your breath. But upon reflection, the
alternatives are much worse,” said Sen. Charles Schumer, D-N.Y.
In a statement late Tuesday, AIG’s board of directors said the loan
will protect all AIG policy holders, address concerns of rating
agencies and buy the company time to sell off assets.
Hank Greenberg, the key figure credited with building AIG into the
world power-house, then replaced as CEO three years ago as part of an
accounting probe; when interviewed today stated.
“No, I think it’s an unfair appraisal,” said Greenberg, “You know,
there are many things that contributed to this unfortunate episode.
after I left the company, all the risk management procedures that we
had in place were obviously dismantled. I can’t explain that. There’s
a new board of directors. One should be asking that board of directors
what they did and why.”
Greenberg said he has lost “my entire net worth. Literally, my entire
net worth.’
“Worked 40 years building the greatest insurance company in history,
one that everyone in the world envied who was in this industry. I’ll
get by, but my heart goes out for the thousands and thousands of
employees and their families who shareholders and not only in the
United States but worldwide. That is a tragedy,” he said.
While the parent holding company, is based in New York, it is really a
large collection of individual insurance companies licensed state by
state; each monitored by state insurance regulators. AIG, despite
financial issues; states its insurance companies were solvent and have
the capability to pay claims. Anyone covered by AIG insurance
companies can expect their claims to be paid as usual, said Scott
Kipper, the Insurance Division administrator
“There is a procedure for insolvencies, and it involves trying to
settle the liabilities of the company to the maximum extent possible.
To the extent they can’t be met, there are guaranty funds in every
state that cover certain types of insurance,” said Robert Hartwig,
president of the Insurance Information Institute, a nonprofit industry
group.
Most companies are covered by paying into there state guaranty funds
Some companies are non admitted, and do not pay into the fund,
therefore their insureds are not protected. Urban Insurance Agency,
does not place business with NON ADMITTED companies.
AIG scrambled Monday to reassure worried insurance clients. “Insurance
policies written by AIG companies are direct obligations of our
regulated insurance companies around the world. These companies are
well capitalized and meet or exceed local regulatory capital
requirements,” said Peter Tulupman, a company spokesman in an emailed
statement.
larry
Sep 18, 2008, 4:01:55 PM9/18/08
to Car Insurance Info Page
September 17, 2008
Last night, AIG's Board of Directors approved a transaction with the
Federal Reserve Bank of New York to provide a 24-month liquidity
facility to AIG in the amount of $85 billion. Access to this facility
will allow the parent company, AIG, to address its immediate liquidity
needs, which is clearly a positive development for policyholders,
producers, employees and shareholders.
In addition, here are a few more important facts to note:
In connection with this transaction, the Federal government will
receive a 79.9 percent equity interest in AIG.
AIG Chairman and Chief Executive Officer, Robert Willumstad, has
resigned his position with AIG. Edward M. Liddy, former Chairman of
the Allstate Corporation, has been named AIG's new Chief Executive
Officer.
Although the New York and Pennsylvania insurance departments were
prepared to allow AIG to exchange certain liquid investment holdings
of the insurance companies for high-valued, less liquid holdings of
the parent company, this transaction was not necessary. The
regulators' consideration of this option demonstrates their confidence
in the financial strength of AIG's subsidiaries.
The Federal government's willingness to act highlights AIG's critical
role in the global financial markets.
AIG is a solid company with over $1 trillion in assets and substantial
equity which is backed by profitable operating subsidiaries that meet
or exceed local regulatory capital requirements.
AIG Property Casualty Group, which includes AIG Agency Auto, has
approximately $32 billion* in policyholder surplus, as well as
invested assets of approximately $98 billion.** These assets are
protected by law and cannot be taken from policyholders!
AIG Property Casualty Group has the resources to pay policyholder
claims and will continue to do so. On average, we are paying
approximately $82 million in claims each day.
AIG Property Casualty Group's financial strength ratings are excellent
and compare favorably with most major companies.
AIG Agency Auto continues to write new business. We remain committed
to, and capable of, serving the needs of our producers and
policyholders. If you have any questions, please contact your local
Agency Auto sales representative.
Thank you for your continued support.
On Sep 18, 11:41 am, larry <la...@urbaninsuranceagency.com> wrote:
> http://www.urbaninsuranceagency.com/insurance-articles/170/aig-and-st...
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